PhilCST

PHILIPPINE COLLEGE OF SCIENCE & TECHNOLOGY

OLD NALSIAN ROAD, BRGY. NALSIAN, CALASIAO, PANGASINAN

MICRO PERSPECTIVE OF TOURISM AND

HOSPITALITY (THC1)

MODULE 7. IMPACTS OF TOURISM

Lesson 5. Determinants of Economic Impact
 PhilCST
PHILIPPINE COLLEGE OF SCIENCE & TECHNOLOGY
OLD NALSIAN ROAD, BRGY. NALSIAN, CALASIAO, PANGASINAN

The extent and intensity of tourism's impact on the

economy hinge on a number of factors. According to Messerli,
these are the:
• economic diversification;
• strength of backward and forward linkages;
• Seasonality; and
• quality of human resources.

Another factor is women agency.

 PhilCST
PHILIPPINE COLLEGE OF SCIENCE & TECHNOLOGY
OLD NALSIAN ROAD, BRGY. NALSIAN, CALASIAO, PANGASINAN

The size of the multiplier effect from tourism spending is dependent

on how much money is retained in the host economy. The retention is
determined whether the inputs for tourism operations can be procured
from within that economy.
A well-diversified economy will be better able to provide such inputs,
compared to one which is underdeveloped or totally dependent on tourism.
It follows that highly developed economies will have higher multiplier
effects from tourism expenditure because the money is retained longer and
will circulate more times.
On the other hand, an undeveloped economy will lose much of the
initial income through leakages, because the inputs for tourism operations
have to be bought from outside the host economy. With a small retained
income, there will be fewer times money can circulate in the local economy,
resulting in a small multiplier effect.
 PhilCST
PHILIPPINE COLLEGE OF SCIENCE & TECHNOLOGY
OLD NALSIAN ROAD, BRGY. NALSIAN, CALASIAO, PANGASINAN

Another factor is the presence of organizers or tour

operators that integrate all the tourism supplies into tour.
Without such entities, the arrangement for travel, stay, and
tours will have to be done by the tourists themselves. This
problem deters some travelers, and therefore, the revenue
which could have been earned from the tour could not
materialize. Many places in the Philippines have outstanding
natural resources but are not able to draw tourists because of
the absence of tour operators.
 PhilCST
PHILIPPINE COLLEGE OF SCIENCE & TECHNOLOGY
OLD NALSIAN ROAD, BRGY. NALSIAN, CALASIAO, PANGASINAN

Seasonality also determines the extent of economic impact.

All things being equal, a destination which is open all year-round
stands to earn more money than one which is open for just a few
months. Seasonality is dictated by climate, wind patterns, school
openings, vacation times, and the occasion of certain festivals, among
others. For instance, surfing destinations are at the mercy of prevailing
winds. Beaches tend to be closed during the wet months. Festivals
have definite cycles. Destinations with relatively short peak seasons
will tend to earn much but only for a brief period of time. This type of
destination must be able to provide high supply of tourism
accommodation and amenities over the brief tourism season.
Otherwise, they will not be able to reap the benefits fully.
 PhilCST
PHILIPPINE COLLEGE OF SCIENCE & TECHNOLOGY
OLD NALSIAN ROAD, BRGY. NALSIAN, CALASIAO, PANGASINAN

On the other hand, destinations with longer peak periods or

open the whole year stand to gain more in terms of income.
Destinations must be able to capitalize on the climatic patterns of
the source countries. For example, the Philippines can take
advantage of the relatively cool and dry season during the "ber
months" by marketing to countries, which experience painfully
cold winters during the same period, like Russia. School breaks
and traditional holidays also determine when people travel to
some destination.
 PhilCST
PHILIPPINE COLLEGE OF SCIENCE & TECHNOLOGY
OLD NALSIAN ROAD, BRGY. NALSIAN, CALASIAO, PANGASINAN

The quality of human resources has a certain effect on

employment potential, The host destination can gain a lot in
terms of all levels of impacts if the employees hired for tourism
establishments are from the local community. This is because the
locals will also spend the money they make within their
community. However, sometimes, there are no qualified
personnel from within the host community. In such situation, the
owner of a tourism resort, hotel, theme park, or restaurant will
have to hire from the outside. That person will most likely remit a
big part of his income to his loved ones. The decision to hire local
is also influenced by political consideration.
 PhilCST
PHILIPPINE COLLEGE OF SCIENCE & TECHNOLOGY
OLD NALSIAN ROAD, BRGY. NALSIAN, CALASIAO, PANGASINAN

A few years ago, a businessman from Puerto Princesa City

said that he avoids hiring local people. The main reason was that
many locals are referred to by local big bosses (maybe
politicians), which makes it difficult to control such staff. Thus, it is
not only the quality of the human resource but also the power
structure in a community that can act as a deterrent to local
sourcing of manpower. Of special concern here is women agency
or women empowerment, which is based partly on their own
capacity and the amount of capital that they have or can avail
of.
 PhilCST
PHILIPPINE COLLEGE OF SCIENCE & TECHNOLOGY
OLD NALSIAN ROAD, BRGY. NALSIAN, CALASIAO, PANGASINAN

Urtasuna and Gutierrez added agglomeration, scale

of tourism development, quality of tourism
management, control and regulation, and physical
and social carrying capacities. Businesses tend to
agglomerate in certain areas because of shared infrastructure
such as a cluster of hotels around a convention center.
According to Graitson, clustering also reduces consumer
search costs, which increases the demand for places
populated by, say, antique shops, theaters, restaurants, and
hotels.
 PhilCST
PHILIPPINE COLLEGE OF SCIENCE & TECHNOLOGY
OLD NALSIAN ROAD, BRGY. NALSIAN, CALASIAO, PANGASINAN

Agglomeration can lead to uneven distribution of

benefits and costs of tourism. Usually, the affluent areas will tend
to attract tourism development, in which case positive impacts,
such as job creation and expanded livelihood opportunities will
be felt. Such places will tend to rise in property prices. On the
other hand, the impoverished areas will tend to be neglected and
will most likely be designated as location for landfills and power
generation facilities which emit pollution and noise. Because of
this, the price of land in that area will get cheaper, thus, inviting
more poor migrants as this is the only place they can afford.
 PhilCST
PHILIPPINE COLLEGE OF SCIENCE & TECHNOLOGY
OLD NALSIAN ROAD, BRGY. NALSIAN, CALASIAO, PANGASINAN

Management is another critical element. If tourism

volume is allowed to expand too quickly, the available
resources of an area might be overwhelmed by the sudden
demand. There will be shortage of water, electricity, and
space leading to decreased appeal of the place, making
investing in it less attractive.
 PhilCST
PHILIPPINE COLLEGE OF SCIENCE & TECHNOLOGY
OLD NALSIAN ROAD, BRGY. NALSIAN, CALASIAO, PANGASINAN

Saveriades described two schools of thought concerning

carrying capacity: one emphasizes the capacity of the tourist
destination to absorb tourism before negative impacts are
felt by the host community, and the other emphasizes the
capacity of the tourist destination to attract and satisfy
tourists before negative impacts are felt by the tourists.
PhilCST
PHILIPPINE COLLEGE OF SCIENCE & TECHNOLOGY
OLD NALSIAN ROAD, BRGY. NALSIAN, CALASIAO, PANGASINAN

- END OF LECTURE -

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